Closing Bell - Closing Bell Overtime: ServiceNow CEO On AI Strength; Rubrik CEO On Blowout Quarter 12/5/24

Episode Date: December 5, 2024

The S&P 500 recorded its first down day of December as stocks pulled back from record levels—but it was another busy Overtime session with earnings from Asana, HPE, Ulta, Lululemon, Victoria’s Secret, Rubrik, Docusign, Gitlab and Samsara. Oppenheimer analyst Brian Nagel breaks down why the “not that bad” quarter for the retailer is actually a positive sign. Rubrik CEO Bipul Sinha on the company’s blowout quarter and its growth momentum. ServiceNow Bill McDermott talks its AI strategy and partnerships. Plus, Bill Holdings CEO Rene Lacerte on his outlook for the small businesses and his own company’s stock run higher.  

And that bell marks the end of regulation. Recording artist Darlene Love ringing the closing bell at the New York Stock Exchange to celebrate the exchange's holiday tree lighting and Chocolate City Relay and Pacers running doing the honors at the NASDAQ. And let's see, we've got a bit of green on the S&P 500, but not too much. You can see it ending there a bit lower. That's the score caught on Wall Street. Winners stay late. Welcome to Closing Bell Overtime. I'm John Fort. Morgan Brennan is on assignment and investors now awaiting some big retail and tech earnings

highlighted by results from Ulta, Lululemon, Hewlett Packard Enterprise, DocuSign, and Rubrik. And Rubrik's CEO is going to join us on a First on CNBC interview to discuss those results before he speaks with analysts on the call. Plus, our Cloud Week series features an exclusive interview with ServiceNow CEO Bill McDermott on how AI and software stocks could fare under an incoming Trump administration. As we await all those earnings, let's bring in BD8 Capital Partners CEO Robert Duran and Columos Investments Co-CIO, Michael Grant. Guys, welcome. Barb, the Russell under particular pressure, it looks like today, down more than 1%, some risk assets not faring too well. Anything to make of that ahead of this jobs report?

Well, I don't know if it's so much connected to the jobs report because the jobs report, I think either way it goes could be positive for the market. If it's strong, that's good. It reflects a good economy. If it's weak, you know, it means the Fed can ease. I think the small cap trade, in my view, has been a trade. And a lot of people have rotated into it. We're constantly looking for the laggards. But if you look at what happened in the third quarter, small cap earnings were still down 6 percent. The economy's been pretty darn good. And S&P was up 7%. And in the small cap indices, 40% of their debt is short term or floating. And with the Fed staying higher for longer, as it looks like right now, we'll have more important data tomorrow and

next week with the CPI. I just don't think small cap has the legs yet to do well. Michael Grant, how much of a sentiment shifter might the jobs report be given the strong sentiment shift that we seem to get out of Salesforce, particularly in software, but somewhat across the board? Well, it's important at the margin, but investors are increasingly going to have to deal with the uncertainties for 2025. A Fed cut is in play in a few weeks' time. It's 50-50 whether they cut or whether they decide to skip a meeting. So in that sense, it's important. But the bigger picture is that it's no longer about the Fed. It's about the

fiscal dominance that's emerged in the last two years. When the Fed picture is that it's no longer about the Fed. It's about the fiscal dominance that's emerged in the last two years. When the Fed was raising rates aggressively, it didn't impact the economy. When the yield curve turned negative, it didn't impact the economy. So it's really about the fiscal story and how that unfolds in all the politics in 2025. Yeah, I've got to interrupt you here for just a moment. Rubric shares are spiking up more than 20% because the results are out. Here's why. Rubric fiscal Q3 2025 earnings beat on the top and bottom lines. Rubric issued guidance for the final quarter of the year that's above the street. Revenues were $236 million versus $218 expected. Loss per share was $ cents versus a steeper 40 cents loss expected. The guide here

is strong. Rubric sees Q4 revenue at 232.5 million at the midpoint versus 225 million expected and a loss of 39 cents versus a steeper 41 expected. Now, of course, as I mentioned, coming up, Rubric's CEO, Bipul Sinha, is going to break down those numbers in a first on CNBC interview right here on Overtime with me before the analyst call. Mike Santoli, I want to bring you in here, too. It's funny. Rubrik's got a partnership deal with Pure Storage, which also had a huge pop on earnings here in overtime. But some of these smaller software names, not that pure as software, having a little bit of a renaissance in the fall and winter here where they had been more abundant for the rest of the year. Yes, for sure, John. They've been kind of spring loaded. I mean, if you look at the move that Rubrik had coming into this report, it's been on a monster

run, similar formula, you know, kind of earlier stage playing on big themes maybe the stock if it was public three years ago is trading way below that level a lot of those are like that and then some substantial short position i mean there's seven percent short in rubric at last reports probably a lot of that's blown out based on how the stock's gone up but this has been happening name by name for a while now in this group so it's a combination of long-term laggards, big themes. They survived some rougher times. Some of them did. And then, obviously, now it's a willingness to believe that there's a monetization path ahead

for a lot of those larger themes that are going through the industry. It's interesting, though. Commvault, which has been public a lot longer, has also had quite a run. It was maybe some people were pitting them against each other, but they've both been winning in their own way. Barbara Duran, how are you feeling about some of the smaller names out there in general? We can talk about technology, but often we talk to you about mega caps and specifically NVIDIA. In this market where valuations have been pretty stretched.

Well, I think it's time to start looking for that next layer of the AI play. And you've certainly started to see that in some of the bigger names, whether it's ServiceNow or Dell, in terms of what's happening with the application software. And that's where we've seen software been very strong the last few weeks, because I think that's going to be the play. We're going to see much more of that in 25. And that, of course, plays to the smaller mid-cap names that are still growing, that have great products. And there's going to be a lot of opportunity in that space. Names we aren't even familiar with yet. Okay. Michael Grant, I want to get back to you and go away from technology for a moment

because we're going to get lots of different kinds of earnings in this hour, including Lululemon. This is a big quarter for retail. There are a lot of questions about whether Lulu is losing share to some challengers. What are we going to learn from that report? How are you feeling about the strength overall of the consumer that's managed to hang in there? Well, the consumer's in great shape. They're not buying homes, so they have a lot of money to spend discretionarily, whether that's on airfares or athletic gear like what Lulu sells. Lulu is a great brand, has a great distribution model, but the core of its business is here in the United States, and it's had some

real fashion misses. So what we need to see is what's happening to those domestic same-store sales. My guess is if those same-store sales are up mid to high single digits, that'll send the stock higher. If not, then Lulu is stuck. And at some point, if it can't turn that around, it has to begin to unwind its store expansion. Okay. Okay, well, Lulu and Ulta results are out. We're going through them, but we're ready with Hewlett Packard Enterprise results. Steve Kovac has those. Steve. Yeah, John's beats on the top and bottom lines.

We're seeing stocks swinging around a bit here, but it is still about up a percent. Let me give you the results. EPS was a beat. Fifty eight cents adjusted. Street one at fifty six cents. Revenue is also a beat. Eight point four46 billion versus the $8.26 billion expected. And within some segments here, we got beats pretty much across the board. Server revenue was a beat. Gross margin is the only downside here, just a slight miss from estimates of 31.1%. John, I'll send it back over to you. And HPE perking up a little bit, up about 2% so far in overtime. While those Lululemon earnings are now

ready, Courtney Reagan has them. Court. Hi, John. Yeah, so it does look like a stronger quarter than expected for Lululemon here. Let's start with the earnings per share coming in at 287. The street was looking for 269, so that's a hefty beat there. Revenue's also stronger than expected at 2.4 billion. The street was looking for slightly less than that at $2.36 billion. Gross margins also stronger than expected at 58.5%. Comparable sales up 4%. The street had been looking for that to grow a little more than 3%, so still not a double-digit number like we had seen before, but perhaps stronger than expected here at least. America's comparable sales, though, were down again, down 2%. International, however, up 25% for comparable sales. Lululemon is also increasing its stock repurchase program by a billion dollars.

And when you're looking at the Q4 guide for both earnings and revenue, I would say pretty much bracketing what the street is looking for with the ranges here. John, back over to you. All right. Court, thanks. Mike Santoli, maybe a little bit of a mixed bag there, but no whale tail to worry about here. Yeah, it seems as if it's close enough into the zone of how people were leaning this stock. Remember, just nine months ago, it was like a three hundred eighty dollar stock. It fell off a cliff.

It's been rebuilding since then. As I keep talking about, we're in a mode right now where investors are kind of willing to extend the benefit of the doubt on some of these either bigger brands or laggard stocks. And Lulu has fallen into both those categories here. Well, you were talking about spring-loaded smaller software names. We've got another one. Asana earnings are out. Simamodi has those numbers. Sima. This is a software company focused on work management with better than expected earnings, a smaller loss than expected, a loss of two cents for the third quarter, John. Revenue of $184 million, which is ahead of Wall Street consensus of $180 million.

And Q4 guidance basically in line with what Wall Street was looking for. The co-founder and CEO, Duskin Moskovitz, comments here on how he's seeing a significant rise in demand. Customers are experiencing meaningful productivity gains across their workflows. And he really says that these numbers validate the market demand for artificial intelligence-powered work management solutions. So you're starting to see more interest, I would say, in the AI-powered software names, as you guys have been discussing. John, stock up 14%. All right. Good news for Asana.

More good news for DocuSign, it appears. Its earnings are out. Kate Rooney has those numbers. It's higher by a lot. Yeah, John, that's due to a beat on the top and bottom line for the third quarter and strong guidance, at least for Q4. Also saw higher billing, subscription revenue, and customer growth in Q3. EPS was a beat by 3 cents. That coming in at 90 cents adjusted. That was on revenue of $755 million. Grew about 8% year over year. Stronger than expected. Subscription revenue, I mentioned.

That was up 8%. Billions up 9% year over year. New customers grew 11%. And then Q4 revenue looking stronger than expected. Same here with subscription revenue. John, you can see shares up double digits, 11 percent, 12 percent now. All right, Kate. Thanks, Michael. Grant, you used to own this name. Don't any longer. They had some trouble. They've got a new CEO. Is it worth another look now? It probably is. I would say those results suggest the company is possibly moving in the right direction.

And I would contrast that with lulu i think lulu's strength really reflects the health of the consumer rather than a core improvement in its uh franchise here in the united states so of the two names i would favor docusign at this point mike santoli um a lot of these smaller names have tended to be interest rate sensitive and when we talk about rates, you know, the jobs picture has been a part of that. We are looking at a jobs Friday tomorrow. Any any buzz out there? Any thoughts you have about how this report may or may not affect some of the smaller and mid cap names? I mean, I think we've kind of become somewhat untethered

from every wiggle in rates when it comes to these stocks, mostly because, you know, it's not as if they're, you know, discounting future cash flows in a careful way. We're running on vibes, emotion, adrenaline in the near term. Bigger picture, if there's definitely a high liquidity environment and a high confidence environment on both CEO level and investor level, these are the kind of stocks that people will probably reach for. Now, in terms of the jobs number, first of all, people have varying theories about how much of a snapback there's going to be from that depressed number a month ago when we was affected perhaps by the storms and strikes. And so I do think there's going to be a kind of eye of the beholder effect on the actual number. I still think the market craves slow and steady job growth, not necessarily

weak so that the Fed does more, but also not something that shows an immediate reacceleration where you might have longer term yields go above their recent comfortable range. All right. Hold tight. Ulta Beauty numbers are out sitting pretty at the moment in overtime after a rough early part of the year. Courtney Reagan, how do the numbers look? Yeah, John, I mean, look at shares going higher here and the immediate reaction for Ulta Beauty, very strong earnings beat, actually 60 cents stronger than the street expected at 514. The street was looking for $4.54. Revenue is beating by just a bit, 2.53 billion compared $2.5 expected. But the same store sales gain

was a nice gain, actually, when the street was expecting a loss. So those were up by 0.6%. The street was actually looking for those comparable sales numbers to fall about 2%. Ulta also raising its guidance for the year. The earnings guidance range is above the street. Revenue probably about in line here and there is an interesting note that i'd like to call out from the ceo where he notes lower inventory shrink and that of course has been one of the names that we've talked about with getting in trouble from some of that shrink as as it's been a victim of some of that orc back over to you all right stick with me the earnings are still coming get lab is out it too is up nine plus percent pippa

stevens has those. Pippa Stevens has those numbers. Pippa? Hey, John, a big jump here on a strong quarter as well as positive guidance. So starting here with Q3, EPS of 23 cents adjusted. That was seven cents ahead of estimates. Revenues of 196 million, also ahead of the 187 million that Wall Street was looking for. Now, for the fourth quarter, the company sees EPS between 22 and 23 cents ahead of the 14 cents that Wall Street was looking for, with Q4 revenue guidance also ahead of expectations. Now, the company did say that Bill Staples will succeed as the company's new CEO. That move is effective today, with the stock now up 8 percent. John? All right, Pippa, thank you. Barb, despite competition with Microsoft,

GitLab managing to have a good quarter here. How much of this is just momentum going on, you think? How much of this is a reflection of the fact that this year, so many of these stocks, investors had stayed away from, maybe underinvested in, and so there's a bit of a reaction here, maybe some short squeezes as well. Yeah, I think it's all of the above, John. I think that investors have been ignoring certain companies, just a little bit afraid. When the numbers come in on GitLab has a new, relatively new AI product. They were a little bit late to the game and they've been getting great traction on that. And that could be an important catalyst for their stock because I suspect that may be what's going on here. They also have a couple subsectors that they can carve

out, but this is an emerging area. And right now, it seems there's room for both of them. But Microsoft, you know, their excuse me, their GitHub has 50 percent share. They have 20 percent share. So we need a little more color in what's going on. But for now, it looks like there's room for both of them to grow. We'll see if they've gained any share from Microsoft. OK, here's one name that's not heading in a positive direction. Samsara. Who's bringing us those numbers? Angelica Peebles has those numbers. Samsara, ticker IOT. Angelica? Hey, John. Samsara beating on the top and bottom line for Q3. Adjusted earnings coming at seven cents a share versus the estimate of four cents a share. Revenue coming in at $322 million versus $311 million. Now, ARR coming

in at $1.35 billion in the quarter versus $1.34 billion. Now, I want to talk about the outlook for a little bit. For Q4, they're expecting EPS of $0.07 to $0.08 a share versus $0.06. And then it looks like Q4 revenue is going to be a little bit lighter than what we're looking for, so $334 million to $336 million versus the $336 million that the street is looking for, John. Okay, slightly under there. The street is used to this one beating by a lot. Angelica, thanks. Well, we're going to find out more about this one tomorrow when Samsara CEO Sanjit Biswas is going to discuss the numbers right here on Overtime. Well, Barbara Duran, Michael Grant,

thanks to both of you. And of course, Mike Santoli, we're going to see you again in just a little bit. Lots of big earnings movers in overtime. Let me catch my breath. Up next, the top analyst reacts to Lululemon's results and what he wants to hear from management when that call starts in just a few minutes. And speaking of big movers, ServiceNow hitting an intraday all-time high today. Coming up, CEO Bill McDermott on whether that company's AI strategy is going to keep driving the stock higher. Guess what he's going to say. Overtime's back in two. Victoria's Secret is out. The earnings at least. Courtney Reagan has the numbers. Court. That's funny, John. Yes, we don't know all the secrets, but at least we know the numbers for

the third quarter here. We can see that it was a better than expected earnings report for Victoria's Secret coming in with a smaller than expected loss. At least the loss was 50 cents. The street was looking for a loss of 630.63 per share there. Revenue is also better at $1.35 billion compared to $1.29 billion. That was the estimate. And then also noting that it's the best quarter of sales growth since 2021 from the CEO. There's a pretty wide EPS guidance for the fourth quarter. They're putting it at a range between $2 and $2.30 per share. The street is looking for $2.10. So a wide bracket around that and also noting some positive early customer response to the holiday assortment, saying that

the third quarter momentum continued through Black Friday and Cyber Monday so far. John, back over to you. All right, the stock cheering up a bit as you spoke, Court, thanks. Well, shares of Lululemon, meanwhile, also moving higher quite a bit more, about 6 plus percent after a beat on the top and bottom lines. Oppenheimer senior analyst Brian Nagel joins us now. He's got a buy rating on the stock. Anything in this report that you see so far, Brian, that shifts the balance of power in this debate over Lululemon? You know, you've got some strong international performance, but the America's not as strong.

Well, good afternoon, John. Thanks for having me on the show. Look, this may sound a little funny, but I think the real key positive here is that things did not get worse. OK, I mean, I'm saying that seriously because, you know, you had Lululemon that has had a growth problem domestically the past few quarters. Looking through these results quickly, things have not gotten worse. And so we're getting closer, in my view, you know, consistent with my positive call on the stock. We're getting closer to that point where the companies can introduce new product domestically, and that should help to pump more life into domestic sales growth. So that's really it. I think that's why you've seen the stock bounce throughout the market. And frankly,

it's had a nice bounce just lately off of lows. Yeah, I was about to say we're awfully close to your three hundred eighty dollar price target. And you said we're closer to knowing some things. It doesn't sound like more convicted. It sounds like we need to be careful around here. No, look, I do. I think you can get this right. And what I tell our clients a lot is one of the one thing that encourages me significantly here is that the problems at Lululemon are largely acute. Okay. It's basically sales weakness domestically in the women's category. You know, as you talked about in your opening, internationally, they're doing very, very well. I was in Shanghai not that long ago with Lululemon management. I mean, they have a great international business in the early stage of expansion. So the problems here are rather acute. And I think that makes them much more fixable in the near term. OK, if you're just looking at the numbers

we've got on the screen right now, Lululemon, we did Ulta, Victoria's Secret all higher. That would seem to suggest that there's some maybe untapped potential in some women's categories there. Is that reading too far into it? Is this more, you know, lower expectations that we're seeing reaction to here based on the way you started your answer about things not being worse? Yeah, I think this is more, much more of an expectations, much more of an expectations issue. Again, I'll say like we're talking, I mean, I talk to our clients about Lululemon. There's been a lot of concern. I don't believe this. I want to make sure I say this clearly.

I don't believe this. But there's market concern that this is a broken brand, that it's falling victim to competition. I don't believe that. And the fact that we're looking here now at third quarter results, and again, like I said, things have not gotten worse, that helps to bolster the view that, look, Lululemon's positioned for better growth once we get this new product assortment in place. All right. We'll see if Lulu can work it out. Brian Nagel, thank you. Thank you. Shares a rubric surging after better than expected results and guidance. Up next, founder and CEO Bipol Sinha gives us the inside take on those numbers ahead of his

call with analysts at the top of the hour. And Synopsys, the biggest loser in the S&P 500 after weaker than expected first quarter guidance, offset an earnings beat. You heard about that here on Overtime yesterday. We'll be right back. Welcome back to Overtime. Rubric shares up about 15.5% in overtime after the cybersecurity resilience recovery company beat on the top and bottom lines, posted strong guidance as well. Free cash flow more than 15 million versus just 100,000 expected from analysts.

Joining me now in a first on CNBC interview before the call is Rubrik's CEO, Bipul Sinha. Bipul, good to see you. Big quarter here with subscription annualized recurring revenue topping a billion dollars for the first time. Thanks, John, for this opportunity. We had another outstanding quarter. Not only we delivered and beat on all the guided top line and profitability metrics, but we also raised, as you said, our full year guidance and a billion dollar. We are very excited about surpassing a billion dollar ARR. That's a big milestone for us. And we achieved it in just over 10 years since Rubrik was actually founded. So your non-GAAP gross margin was also at 79.2% versus 76.3% expected. And the guidance that you're giving

beats expectations by even more than the quarter you're reporting, which seems like a lot of confidence. So you combine that confidence with the margin. What are you seeing demand-wise and how is that translating into those metrics? We are not seeing any change in the demand

for our product in the marketplace. Cyber resilience is the number one topic in cybersecurity because businesses have spent a lot of dollars in prevention tools from network to endpoint and everything else, but they feel that their cyber attacks are inevitable and they need to be resilient against cyber attacks and digital disruption. And that's where they are focused on.

And we have a unique product architecture that combines DSPM plus cyber recovery in a single platform to uniquely deliver full cyber resilience. And our product, we are winning vast majority of the deal and we are winning this marketplace. We had Pure Storage CEO Charlie Giancarlo here on Overtime this week as well. You got a partnership with Pure that you're announcing here. And part of what drove enthusiasm, I think, behind Pure's quarter was a deal with a top four hyperscaler that they've got going, changing out the way that they do storage. And storage, of course, is a key part of backup and recovery. Flash storage, I guess, would allow you to do that more quickly, more flexibly. What kind of re-architecting is happening even at the hyperscaler level, and what's the size of that opportunity for the likes of Rubrik?

First of all, I'm very excited about Charlie. He's a great friend, and we are a great partner. If you look at the cloud landscape, cloud provides a great infrastructure, great infrastructure security to deliver business outcome. And we are bringing cyber resilience to the cloud. And the combination of cloud infrastructure security and cyber resilience is the full cybersecurity across the cloud. And we are doing this with AWS, we are doing this with Azure, we are doing this with GCP. We have this tremendous opportunity to help businesses do distro transformation, cloud transformation with confidence that their services will be up and running. Most recently, we also announced at AWS reInvent a new AI product with AWS called Annapurna.

Very excited about the cloud opportunity for us. Continue to do a lot of innovation with all the cloud providers. How is AI changing the backup and recovery space for you? There are two aspects to AI for backup and recovery. The number one aspect is that can we actually increase the productivity of our users by delivering AI agent for them to get their outcome, business outcome, And that is our Ruby product. And then the second thing that we have done is to open up the Rubrik platform as the secure data infrastructure for AI. As you know, AI is looking for data from all the nooks and crannies of enterprise application. Rubrik is extracting, securing, and managing all

the business data in one place. And now we are opening up the Rubric platform with embeddings so that the people can use Rubric data to create Gen AI applications that are secure and trusted. All right. You heard it here first. Now we'll let him get to the analyst called Bipul Sinha, the CEO of Rubrik. Thanks for joining me here on Overtime. Thanks, John. We've got an alert, a news alert on Chevron. Pippa Stevens back with that. Hey, John.

Well, Chevron is cutting its CapEx spending plans as oil prices continue to stay muted. They just now announced their 2025 CapEx range of $14.5 to $15.5 billion. That is down from the high end of $16.5 billion of this year. Now, for Q4, they also said they expect to recognize up to $1.5 billion in charges and impairments for things relating to restructuring and asset sales, among other things. John? All right, Pippa, thank you. Now it's time for a CNBC News update with Kate Rogers. Kate. Hi, John. The National Weather Service canceled a tsunami warning for the Northern California and Oregon coasts after a 7.0 earthquake struck near Eureka, California

earlier this afternoon. The quake was felt as far away as San Francisco, but there have been no immediate reports of injuries or significant damage. According to AccuWeather, it was the most powerful quake to hit the area since 1995. The Justice Department ordered McKinsey & Company's African subsidiary to pay $122 million to resolve a bribery scheme. The consulting firm was charged with one count of conspiracy in violation of the Foreign Corrupt Practices Act for bribing South African officials to obtain consulting contracts between 2012 and 2016 that the DOJ says generated tens

of millions of dollars in profits. And NASA announced more delays this afternoon in its plan to send astronauts back to the moon. The agency said it investigated how the Orion spacecraft's heat shield fared during the Artemis 1 mission and decided to push the Artemis 2 launch from next September to April 2026 and the Artemis 3 lunar landing to mid-2027. John, back over to you. Okay, thanks. Well, up next, ServiceNow CEO Bill McDermott on the outlook for his company's AI strategy and how the software industry might fare under the incoming Trump administration. And Intel making two new additions to its boardroom as its stock sells off for the fourth straight day following the retirement of CEO Pat Gelsinger.

We'll be right back. Welcome back to Overtime. Shares of service now hitting a 52-week high today. That stock is up 25% so far this quarter as demand for AI software continues to ramp. And joining me now for Cloud Week is Bill McDermott, CEO of ServiceNow. Bill, some more superlative here. The stock is up almost 60% year-to-date. Market cap now bigger than Disney, just shy of Adobe, closing in on SAP, where you used to be CEO. So as we look ahead to 2025, you've got agentic AI on the menu as well. How much more transformation is there left in the tank?

Oh, John, we're just getting started. If you look at the AI platform for business transformation, ServiceNow has formed itself as the control tower for AI transformation across all other platforms in the enterprise. And what's really happening, John, is work is not happening in a single department. Work goes across every function in an enterprise. So it's our ability to manage the end-to-end task and request management process. And this includes all people, all processes, all data, and all systems. And we're the only enterprise software company in the world that has the end-to-end solutions to excel at business transformation management because we have one platform with one architecture and one data model, and that makes AI rocket-fast,

totally secure, and cheap to run. And that's what people love about ServiceNow. Something that I'm noticing here in Cloud Week, after I've been to Microsoft Ignite, we saw Salesforce earnings this week as well. There are a lot of people talking about working across the hyperscalers, across clouds, but then you're starting to see some sniping, particularly Mark Benioff at Microsoft and Office. And I wonder, what does that say about this stage that we're in right now in cloud as we look ahead to AI really ramping productivity? Well, when I think about our position, you know, ServiceNow is really the workhorse that's putting AI to work for people. No matter what system we connect to, we give you a bright future because ServiceNow is working for you. But this is what I think should be very interesting to your viewers. Most AI agents today are stuck in their own siloed system, which, John, those siloed systems

have multiple instances in almost every large company. So by adding AI agents to siloed systems with multiple instances that weren't well integrated to begin with, you're simply adding to the hornet's nest of complexity. So our position is rock solid. Our ServiceNow AI agents talk to each other, they talk across different systems, and they manage multiple different workflows in an organization.

And we string this all together with an orchestrator that automates the entire organization, not just one cloud or a single function. And since you mentioned Microsoft, we've always expanded our partnership with Microsoft. We're modernizing the front office now with Microsoft by connecting CoPilot and our AI agents with Microsoft's AI agents. And now together, two market-leading companies are telling customers we're in full cooperation mode. And I think that'll be very helpful for our customers and not such good news for the competition. You mentioned the competition and a hornet's nest of complexity. When do customers start getting stung? When do customers start getting what, John? When do customers start getting stung by that hornet's nest and we start to see some impact from that? John, it's a great question.

And the reality is customers are in the early days now of investing in AI. And the feedback that I already have and that I got yesterday from a very large bank in Brazil to optimize for a single function for tasks in a disconnected, uncoordinated manner, while you might help a person do a task more efficiently, you have to have a request and you have to have a closed-loop action and process that gets indexed and recorded on an end-to-end basis. Only ServiceNow does this in the enterprise. So I think the customers, once they hear our message and they understand that we connect the data fabric, which is, think about this, unifying data from hundreds of systems to the app layer where you have all these disparate, disconnected, unintegrated apps. We put it all together, and our agents work with everyone else's agents. So if you want to invest in agents in a silo, go for it. We'll make it work better anyway. But I do think people

are getting smart and they're putting their money on ServiceNow because we deliver. We deliver fast and the ROI is exceptional. Looking forward to 2025 and how all this shakes out. Bill McDermott, CEO. Me too, John. Great to have you here for Cloud Week on Overtime. Thank you, John. Can't wait. Great to have you here for Cloud Week on Overtime. Thank you, John. Cloud Week's going to conclude tomorrow when we're going to be joined by Samsara CEO Sanjit Biswas and the first on CNBC interview about earnings and more. Meantime, Intel shares down for a fourth straight day following Pat Gelsinger's retirement as CEO this past Sunday. Meantime, the chipmaker announcing the addition of two new directors to its board, former ASML chairman and CEO Eric Maurice and microchip technology chairman and interim CEO Steve Sange.

The move adds to experienced semiconductor industry executives to the board, something that's been arguably lacking at the company, with the exception, of course, of former Intel chief financial officer Stacey Smith. And cue the QR code, because that leads in very nicely to the latest installment of my On the Other Hand newsletter. You can scan that and subscribe. This week's debate, should Intel abandon former CEO Pat Gelsinger's plan to become a leading foundry and just focus on designing chips instead? Go ahead and scan that or type in cnbc.com slash OTOH to join the conversation. Read both arguments. Now, up next, Mike Santoli is going to come back and break down Bitcoin's latest milestone and what history says about where the cryptocurrency might head next. We'll be right back.

Welcome back to Overtime. Mike Santoli returned for the broader look at Bitcoin after it rallied above $100,000 a Bitcoin in the still of the night. Mike? Yeah, John, above and now a little bit below. Look, there's not a right or wrong price for this thing. I've said that from way back at the beginning. It's some combination of risk appetite, just the sort of broader adoption of an alternative asset class, techno optimism, all of that feeds into it. But of course, it does go on these huge streaks and then consolidate. So I wanted to point out here from the early part of this year, January 10th, is when the Bitcoin ETFs were finally approved. It was widely anticipated.

It was going up in advance. Once we got it, there was a very mild sell the news response and then almost vertical, like a 60 percent move in a few weeks, almost no time. Here we've had something similar following the election sideways for a long time, and then this spring higher. It's actually not quite as up as much as it was back in January to February as it, you know, that it is now. And as a matter of fact, it's less overbought right now. So take that for what you will. But it didn't last awful long once you went up vertically and then had to consolidate. And again, we did kind of lose the 100K level and some of the associated stocks also pull back. Now, there's also this sort of linkage, at least a vague one, between parts of the equity market and Bitcoin. Starting about a year ago, I started to point out NVIDIA and Bitcoin moving together. It seemed to date back to the middle of 2023.

It could be somewhat coincidence. It could just be drawing off of the same types of traders who feel in a good and bad mood at the same time. But you see here that Bitcoin is now kind of closed this gap that it had with NVIDIA. But what I really want to point out is Palantir and Coinbase. Now, Coinbase, we know why. Right. It's directly levered to activity in cryptocurrencies. But Palantir has got this other sense out there. It's going to be AI warfighting. And it's this privileged company that's close to perhaps the incoming Trump administration. Just has a storyline attached to it. And they have now rocketed ahead of Bitcoin. Obviously, smaller market caps, but still remarkable stuff. It's this weird bit of energy in this market right now.

I understand the kinds of enthusiasm and belief about the future that has led Bitcoin to go higher. But I wonder what would ever make Bitcoin go down? I mean, you kind of can't, I imagine, compare it to gold because it's not something people are running to just for safety. In a way, it's certainly gotten a lot more established than it was when it got down into the teens, you know, a couple of years ago. Any thoughts out there about what would make it, if anything, go way down? It's gold for optimists, essentially. And the first thing I would say, and this is kind of circular logic, but at some point, if you get a genuine momentum break, if it gets so overheated on the upside, what you have is shorter and shorter term money handing it back and forth over that period of time. And so usually if something goes parabolic and it breaks, then you have to kind of reassess and the market's got some

downside to it. I guess, obviously, we know micro strategies out there raising capital from the public and convertible securities telling you they're going to buy Bitcoin. This is a huge incremental buyer that you know is out there. So if that process was broken a little bit, if somehow they weren't able to raise the capital that they thought they could in the bond market and the equity market, who knows? Something like that. But otherwise, it's just sort of waiting for the enthusiasm to get spent. Huh. Yeah.

Maybe it's like real estate in that way with the leverage in some way I don't know Mike Santilli quite a run for Bitcoin and and perhaps continuing you mentioned Palantir Morgan Brennan is going to speak with the company's chief technology officer tomorrow 4 p.m Live from the Reagan National Defense Forum and she'll also be speaking with other big names in the defense industry throughout the day, including a rare interview with the CEO of Booz Allen Hamilton right here on Overtime. While still ahead, Bill's stock has been booming in recent months, formerly known as Bill.com, helping to drive the software ETF to new highs. Bill's CEO, Rene Lacerque, gives us his outlook for the business and the industry in just a bit here on Overtime. Welcome back to Overtime. Software stocks helping power the recent run higher in tech.

The software ETF IGV notching an all-time high this week. One of the top performing names in that fund, Bill Holdings, up 70% in the last three months, hitting a 52-week high today. Joining us now, first on CNBC, is Bill's CBO and founder, Rene Lacerre. Rene, it's been too long. Good to see you. So we got a jobs report tomorrow morning that's going to give us some more good data on the economy. From your perspective, how are small and medium businesses holding up with labor and borrowing costs? And why have you guys been saying they're stable and maybe a little optimistic?

Well, thank you, John, for having me on the show. It's always good to connect. I agree it's been too long, so thank you for that. The businesses have a resilience in them. I grew up in and around small businesses. I've been serving them for 30 years, and they like to get stuff done. That's the cornerstone of how they think about the world. They want to get stuff done. And so what we see in the market right now is that there is increased stabilization across their spend patterns, if you will. So a year ago, in Q1 of

a year ago, we saw spend contracting by negative 4%. This year, we saw it increase by 2%. And so that tells you that businesses are starting to actually think about investing in the future. They're starting to think about how do they grow their businesses. And they want to use Bill to actually leverage the platform that we built for innovation around how they manage their financial operations. So we're excited about everything that they're doing. So with the technology that you're offering, you know, through the cloud, virtual card helps customers manage risk. What's next, particularly with invoice financing and how is lending fitting into your business strategy? Yeah. So one of the things

I've learned is that SMBs care a lot about cash flow. Cash is king. Everybody says that. And the way they think about cash is they've got to stretch out their payables or pull in their receivables. So invoice financing is an example of how they can pull in their receivables. Suppliers on our network, we've got over 7 million on the network across our platform. They have a chance to accelerate their customers' invoices to them. By 60 days, they take advantage of the offer that we have. Now, this is a controlled beta right now, but what we're doing is we're understanding and leveraging the data we have. We have a massive amount of data, $1 trillion in spend on the platform since 2018, 1% of GDP. We use that data to kind of understand what is the offering we need to make for the S&P at that

time so they can accelerate their working capital cash flow. And that's something that we think we have a unique innovation advantage on. Are you modeling potential impacts of tariffs on SMBs and your business in a second Trump administration? You know, I think at this point, it's too hard to tell exactly what the impact of tariffs will be. What I do know that SMBs care about is how do they manage their costs. And so if tariffs have an impact of actually increasing costs for SMBs, well, the fact that we help them save 50 percent of the time it takes to manage their financial operations, that's going to be a huge driver for how they manage costs. And so we look at the insights we provide across the platform, the capabilities we have as a way to help SMBs, no matter what's going on from government and what's

happening in the economy. That's the cornerstone of what we do is we exist to help SMBs succeed. You need a short answer here, but larger businesses, you've been scaling up. How much further can you go? We support businesses all the way up to half a billion dollars in revenue very comfortably. And so, you know, we have a platform that's horizontal. It helps customers do all the things they need. And so we're going to always continue to support customers as long as they need help. We're going to be there for them. All right.

Rene Lacerde, Bill's founder and CEO. Thanks for joining me here on Overtime. We got a jobs report in the morning. We got Sam Sara's founder and CEO right here on Overtime. For now, that's going to do it for Overtime. Fast money starts now.